A New And Fourth Investigation Into AZ PSPRS Announced: “So Many Scandals”

Trustees also voted to release a federal [FBI] grand jury subpoena after losing a court case in which a judge ruled the documents were public records.

The subpoena, given to The Arizona Republic on Monday evening, seeks more than 100 documents, including records involving certain real estate investments with Scottsdale-based Desert Troon Companies.

The subpoena also seeks confidential letters from the chief investment officer. Other records show [CIO Ryan] Parham was involved in his capacity as chief PSPRS investment officer with real estate investments managed by [Desert] Troon.

… the board last year suspended the performance bonus program.. following allegations by former employees that PSPRS inflated the values of real estate values in order to trigger bonuses.

Many of the concerns by four investment staff employees who quit in protest had to do with Desert Troon. The subpoena shows many documents related to the trust’s investments with Troon are part of the federal investigation.

Phoenix City Councilman Sal DiCiccio, an outspoken critic of pension system abuses, said the PSPRS board has “no accountability to taxpayers or the beneficiaries of the pension plan” in awarding bonuses to Parham during a FBI investigation.

“This is insane. They have the worst financial record of any of the (state) funds, and they are giving him a bonus?” DiCiccio said.

The councilman also has formally asked the Attorney General’s Office to investigate the illegal raises Hacking gave to the investment staff. DiCiccio also wants the raises, which were stopped last month, repaid.

Stephanie Grisham, a spokeswoman for Horne, said Monday that DiCiccio’s complaint has been forwarded to the Auditor General to investigate.

The longest running scandal dates back to last year, when the three high-level investment personnel mysteriously quit the fund—presumably in protest of something.

It didn’t take long to find out why. Allegations soon surfaced that other investment staff at the fund had inflated the value of real estate assets in order to trigger large bonuses for themselves. A federal criminal investigation is still ongoing.

But back in March, watchdog group Judicial Watch asked the fund to release the federal grand-jury subpoena related to those allegations to the public. The fund refused, and so the matter went to court.

A judge ruled Wednesday that the subpoena is a matter of public record, and PSPRS has to release it. From the Arizona Republic:

Judicial Watch filed a public records request for the documents after The Arizona Republic in early March reported that PSPRS had received a federal grand jury subpoena as part of a criminal investigation into whether pension-trust managers inflated certain real-estate investment values. PSPRS has denied the allegations.

The trust refused to release the records, prompting Judicial Watch to sue. The trust claimed it was not in its best interest to release the records and that disclosure might interfere with a federal grand jury investigation.

However, the judge said “PSPRS does not show any specific, material harm that would result from disclosure of this federal grand jury subpoena.” He also ruled that “although the public records law does not mandate disclosure of every document held by a state agency, a document with a ‘substantial nexus to government activities’ is a public record. … Clearly there is such a substantial nexus here.’ “